Rewarding outside directors
By: Assaf Hamdani & Reinier Kraakman.
Contributors: Kaakman, Reinier.; John M. Olin Center for Law, Economics, and Business.
Series: Discussion paper -- no. 578; Discussion paper (John M. Olin Center for Law, Economics, and Business : Online) -- no. 578.
Publisher: Harvard Law School
Published: 2007
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "While they often rely on the threat of penalties to produce deterrence, legal systems rarely use the promise of rewards.  In this Paper, we consider the use of rewards to motivate director vigilance.  Measures to enhance director liability are commonly perceived to be too costly.  We, however, demonstrate that properly designed reward regimes could match the behavioral incentives offered by negligence-based liability regimes but with significantly lower costs.  We further argue that the market itself cannot implement such a regime in the form of equity compensation for directors.  We conclude by providing preliminary sketches of two alternative reward regimes.  While this paper focuses on outside directors, the implications of our analysis extend to other gatekeepers as well"--John M. Olin Center for Law, Economics, and Business web site.
Notes: Title from PDF file as viewed on 3/16/2007.

Includes bibliographical references.

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Mode of access: World Wide Web.